Are You About to Get Hit By the Jock Tax?


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11-19-2010-1

Maybe I should have called this article, “What do you have in common with professional athletes?” The answer is: TAX. But it’s not just your normal, run of the mill, federal and one state tax return and tax due. In this case, it’s a tax return for every state that has determined that you have, that might have created income tax nexus.

All week we’ve been talking about sales tax nexus because it’s the easiest tax to get hit with. And it’s the easiest tax to create a past tax nightmare for you too. That’s because you are responsible for collecting and paying sales tax for any taxable sale you make in a nexus state to a resident. But if you don’t collect the sales tax, then you still are responsible for paying the sales tax.

Income tax nexus is generally a little harder for a state to prove, but it can be a whole lot more expensive! That leads us to the article title. For almost 20 years, states have been aggressively pursuing their fair share of tax for pro athletes.

For example, when Steve Nash (Phoenix Suns) plays in LA, he pays tax to California. Some of the states have clearcut rules. For example, it takes 15 days of work in New York to be subject to New York taxes. Other states like Michigan figure you’re subject to MI taxes on the first day.

In some cases, the math gets a little complicated and the athletes end up paying double taxation by being subject to taxes on the same income in more than one state.

Now here’s the tough part. The states are now coming after you. You can read more about this ‘jock tax’ at http://bit.ly/apHPbf

And make sure you’re registered at Diane’s Seminars for our FREE Saturday seminar “Nexus Strategies to Pay Less Tax.”



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